Finding a job after college can be difficult if not impossible in a bad economy, and for those that do find a conventional job, they may not be making the hourly wage they had hoped for.
They may not even be making an hourly wage that allows them to pay all their bills and student loans. That scenario is so frustrating that many young adults have decided to create their own jobs by starting their own businesses.
The key to successful maintenance of a new business is to start small. It’s important to not get over your head when you first start out. That may mean forgoing the retail store or commercial office space in favor of working from space you already have in your home, garage or apartment.
It’s also a good idea not to worry about arbitration costs, or anything else legal related at this point. There’s certainly a time and place, but getting off the ground is much more important initially.
By starting your business from home, you’ll be saving yourself thousands in start-up costs. It may also eliminate the need to find venture capitalists and small business loans, both of which can be hard to attain if your drowning in student loans and have very few assets.
Know What You Need To Survive
When it comes to maintaining your business, you need to know what you need to survive. This isn’t just about breaking even on the business. This is about breaking even on the business and paying all your personal bills.
Let’s say it costs you $800 a month to run your business from your home. That includes supplies, products, phone lines, taxes, insurance and extra Internet services. Then, let’s say it costs you another $2,000 a month to live in your home and pay all your bills.
In order to break even on your business and pay all your bills, you need $2,800 a month. That breaks down to $93 a day. Any less than that and you’re either losing money on your business, or you are not paying your bills.
Invest Profits Wisely
In the above scenario, anything over $93 a day or $2,800 a month can be considered business profits. You don’t need that money to live, and you don’t need it to pay your business expenses. That means it’s profit. After paying all your business expenses and your salary, you have money left over.
It’s important to take all your extra money and invest it wisely. This can be in the form of savings accounts, stocks, bonds or other investments accounts, but whatever you do, make sure the account earns interest or capital gains.
One of the best ways to make money is with money, and the more of it you have, the more money you can make.
Put Back Into Your Business
Don’t forget to put some of your profits back into your business. This can be in the form of new equipment and supplies, technology upgrades or expansion, or it can be in the form of bank accounts and money for future use.
Cash On Hand
It’s also a good idea to have three to six months’ worth of cash on hand in case your business slows. This is called preparing for a rainy day. Small businesses in the early years can be very fickle. They may make a lot of money one week and next to nothing for two weeks. Always save enough money back that you can weather the downturns.
Photo: Eric Hamiter